An annual allowance for wear and tear of a capital good is known as ________.

Question

Question

This question was previously asked in

SSC MTS Official Paper (Held On: 14 Jun, 2023 Shift 1)

Answer 1

The correct answer is depreciation.

Key Points

Depreciation refers to the decrease in value of a capital good over time due to wear and tear, obsolescence, or other factors.
It is an annual allowance that is deducted from the value of the asset for accounting and tax purposes.
Gross investment refers to the total amount of investment made in a particular period, including both capital goods and inventory.
Devaluation refers to the decrease in the value of a currency in relation to other currencies, often due to economic factors such as inflation or political instability.
Disinvestment refers to the sale or liquidation of assets or investments, often for strategic or financial reasons.

Additional Information

Capital goods are long-term assets that are used in the production of other goods or services, such as machinery, equipment, and buildings.
Devaluation can have both positive and negative effects on a country's economy, depending on the circumstances.
Disinvestment can be voluntary or involuntary and can have various consequences for the company or individual involved.